Maruti Suzuki likely to breach pre-covid sales peak in FY24

For Maruti Suzuki, the shift to categories with a higher share in overall PV sales, like SUVs, has been strategic, as it expects share of small cars to decline gradually. (BLOOMBERG)
For Maruti Suzuki, the shift to categories with a higher share in overall PV sales, like SUVs, has been strategic, as it expects share of small cars to decline gradually. (BLOOMBERG)

Summary

The company looks to regain lost market share with new SUVs and premium offerings

New Delhi: Maruti Suzuki India Ltd, the country’s largest carmaker, is poised for a record-breaking year in FY24 as it seeks to regain its lost market share with the launch of new sport utility vehicles (SUVs) as well as its premium offerings.

While most carmakers saw record passenger vehicle (PV) sales last year, Maruti Suzuki is yet to surpass its pre-covid domestic sales volume record of 1.753 million units in 2018-19.

In FY23, the company sold 1.645 million vehicles in India. While the industry expects 5-7% growth this fiscal year on the back of new launches, Maruti Suzuki should be growing at a faster pace to surpass its highest-ever sales.

However, much will depend on how the automobile industry grows from here on, considering the high interest rate, and general economic scenario, said Shashank Srivastava, senior executive director of Maruti Suzuki.

“Since 2018, the market constitution has changed entirely. When competition was heavily betting on diesel and SUVs, we were still very small in SUVs. Now, our competition has an SUV penetration of 65% of total sales, while ours is just 22%. It was much lower in 2018 at just 8%," he added.

For Maruti, the shift to categories with a higher share in overall PV sales, like SUVs, is strategic, as it expects the share of small cars to decline gradually.

Despite small cars continuing to see significant sales in India, Maruti Suzuki, which accounts for two-thirds of passenger vehicle sales, expects the pace of growth to be slower compared to other segments, he added.

In fact, as a percentage of the total market, hatchbacks are likely to shrink from 33-34% to close to 30% by end-2023, though the absolute volume may witness an uptick as the market expands.

“We weren’t able to breach those numbers earlier because the lay of the market in 2018 has been quite different in terms of the contribution of different segments. From 22%, it suddenly became 47% of the market, even though our presence was not very different. We were competing with two products then. Our peak also included about 480,000 diesel vehicles which we had to replace, and we were able to do 334,000 in 2023, not fully replacing diesel demand. Those OEMs (original equipment manufacturers) who were substantially invested in the new lay of the land could benefit," Srivastava said

The launch of its multi-purpose vehicle (MPV) Invicto has triggered considerable interest, with the strong hybrid based on Toyota’s Innova HyCross seeing over 7,000 bookings. Maruti can roll out just 500 vehicles in the first month from Toyota Kirloskar Motor’s Bidadi facility, even after capacity was increased to meet the demand for the various models of Innova and Invicto.

Invicto is the first product from Maruti’s stable with an on-road price of around 30 lakh, to take on the likes of not only the likes of Kia Carens and Hycross but also three-row SUVs such as the XUV700, Hyundai Alcazar and the Scorpio-N.

“We see 58% cross-consideration between MPVs and SUVs in the three-row utility vehicles segment, which is higher than other segments," Srivastava added.

Maruti Suzuki’s SUV lineup comprises the Fronx, Jimny, Grand Vitara and new Brezza.

While Brezza is sold through Maruti Suzuki’s Arena outlets, other models are distributed via the Nexa channel, reflecting Maruti Suzuki’s focus on moving up the value chain in high-margin price segments and the aspirational vehicle class.

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